– Daily Flows & Commentary BY THE CURVE TEAM –

Daily Flow & Insights – Unemployment Falls

Friday, 20th May, 2022

Numerous ADI’s continued the hunt for funding in what was another frenzied day of activity yesterday.
ADI demand was spread broadly across domestic unrated to BBB+ rated names, with many still seeking funding today and proving negotiable on pricing to secure deposits.
A new unrated name who has never come to market for wholesale funds offered 1.70% for 3 months to middle market investors and 1.60% to FI’s, the highest rate we have seen so far at this term.
Bank of Queensland/ ME Bank increased their rates across the curve to what are now the highest levels across several terms.

The unemployment rate in Australia is now 3.90%, falling from 4.00%.
Total employment only rose by 4000. Markets were expecting an increase of 30,000.
The discrepancy is due to a large shift within the market from part-time to full-time workers. Full-time employment rose 92,100, while part-time employment fell 88,400.
Most notably, underemployment continues to fall (now 6.10%) down 0.20%. During pandemic lows, this figure hit 12.60%.
Impressively, the unemployment rate in WA is a staggering 2.90%!
This print, combined with the wage growth data the day before, alleviates some of the pressure placed on the RBA to hike rates more aggressively.

Since Wednesday, reference rates have started to decrease, likely on the back of weaker than expected wage data.
3-month BBSW has fallen from highs of 1.08% on Wednesday to 1.04% yesterday and holding at this level again today.
Without the current funding pressure ADIs are experiencing, term deposit rates would follow this trend.

Curve Team